A Marietta father and son have filed a lawsuit charging that Cobb EMC Chief Executive Dwight Brown and other officials are siphoning off the cooperative's funds to benefit a private for-profit affiliate that they control.

"Cobb Electric Membership Corp., Cobb Energy Management and Dwight D. Brown have improperly squandered, mismanaged and converted the resources of Cobb EMC," said the lawsuit filed by Sims and John M. Maddox.

(ENLARGE)

Dwight Brown made almost $336,000 as Cobb EMC's CEO in 2005, according to tax reports.

Cobb EMC is a cooperative whose customers are its members and is largely unregulated by the state. Brown, as CEO of Cobb EMC, set up a private for-profit company, Cobb Energy Management, which Brown also runs. The for-profit performs services for the co-op, according to the lawsuit.

Last week at the co-op's annual meeting, members demanded to know Brown's salary from Cobb Energy and the details of its business relationships with the co-op.

"We don't know what he [Brown] gets paid, and he says it is nobody's business," said Adam Webb, the lawyer for the Maddoxes. "Cobb EMC owns 30 percent of Cobb Energy, so why wouldn't his salary [at Cobb Energy] be the EMC members' business?"

The lawsuit contends that Brown is a major shareholder in Cobb Energy, that co-op board members own stock in Cobb Energy and that Cobb Energy has given stock as Christmas presents to employees.

Efforts to reach a co-op spokesman for comment were unsuccessful.

An Atlanta Journal-Constitution story on Aug. 19 raised questions about the co-op's finances and transparency, including its relationship with Cobb Energy.

Webb said the plaintiffs want a Cobb County court to authorize a class-action lawsuit of co-op members to force the two companies and Brown to reveal their financial dealings, as well as the financial relationships between Cobb Energy and co-op executives. They also want to know how much Cobb Energy gets paid for operating the co-op through a management agreement and Brown's compensation as the Cobb Energy CEO. He made almost $336,000 as the co-op's CEO in 2005, according to tax reports.

Co-op members own their EMCs by investing in them every month when they pay their bills. The lawsuit contends that Georgia nonprofit cooperatives refund an average of $16 million a year to members but Cobb EMC has not returned any money to members in three decades.

Co-op officials, however, have said that they have passed through $33 million in cost savings even if it did not return members' invested capital. The co-op says the $33 million came from wholesale energy savings since 1996.

Members are supposed to control their co-op by electing board members every year, but turnout is typically low. The directors they elect can hire and fire co-op management. Co-ops are exempt from state regulatory oversight based on the idea that customers control them.

"Mr. Brown engaged in activities that sought to maximize his own profits at the cost of plaintiffs and members of the proposed class," the lawsuit said. "Mr. Brown and other officers .... have personally and secretly profited or derived an unfair or unreasonable advantage by reason of their official and corporate positions."